FactSet Research Systems announced FY21 EPS guidance that fell short of analysts’ expectations. Meanwhile, the integrated financial information and analytical applications provider reported lower-than-expected earnings in 2Q.
FactSet (FDS) reported 2Q earnings of $2.72 per share, which grew 6.7% year-over-year driven by higher operating margins offset by an increase in the tax rate. However, earnings missed the Street’s estimates of $2.74 per share.
Revenues increased 6% to $391.8 million and marginally beat the consensus estimates of $391.5 million. The top-line grew due to higher sales of analytics and CTS (content and technology solutions). At the end of Feb. 2021, the annual subscription value (ASV) plus professional services stood at $1.6 billion, compared with $1.5 billion at the end of Feb. 2020. (See FactSet Research stock analysis on TipRanks)
As for fiscal 2021, FactSet anticipated adjusted earnings in the range of $10.75-$11.15 per share, lower than the consensus estimates of $11.17 per share. The company forecasted FY21 revenues of $1.570-1.585 million while analysts were anticipating revenues of $1.58 million.
Following the results, Oppenheimer analyst Owen Lau maintained a Hold rating on the stock. In a note to investors, the analyst said, “in the near term, growth investment could be a drag to margin expansion, but those are key ingredients for future revenue growth, reflected on accelerating ASV growth.”
Overall, the rest of the Street has a Moderate Sell consensus rating based on 3 Sells and 2 Holds. The average analyst price target of $275 implies downside potential of about 11.7% to current levels. Shares have gained 23.4% in one year.
On TipRanks’ Smart Score ranking, FactSet Research gets a 3 out of 10, suggesting that the stock is likely to underperform market expectations.
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